Manufacturing Stock Flies as Markets Plummet on Tariff Plans
The remarkably consistent return to volatility continues during today’s training. Stocks had been posting an impressive show of confidence this week, before losing momentum during yesterday’s trading. Stocks are down sharply today, with all major indexes down at least 1% at the time of this writing.
While the pullback started with Federal Reserve language indicating a determination to stick to rate rises in the face of market volatility, it accelerated today with President Trump’s announcement of substantial tariffs on steel and aluminum. The prospect of a genuine trade war between the US and China seems to be seriously rattling investors.
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In general, steel stocks have been helped—and manufacturing stocks hurt—by the possibility of higher metal import prices. This fact makes today’s Top Performer—a diversified manufacturing stock—a bit of a curiosity.
Jason Industries had a dramatic few years. As recently as spring 2015, JASN’s stock was closing in on $8. A financial crunch, however, sent the stock into a years’ long tailspin. It’s price flirted with the $1 mark for much of 2017.
A return to profitability this past September offered some respite for the stock, sending the stock above $2 for much of past several months’ trading.
Those gains accelerated dramatically today, fueled by the release of Jason Industries’ financials for 2017Q4. Despite a small downtick in sales, leaner operational costs are driving increased cash flow.
Jason is a diversified manufacturer of parts for various industries. For instance, they manufacture seats for vehicle ranging from John Deeres to Harley Davidson. They make everything from lightweight cabin panels for aircraft to gas engine parts.
Investors bought the stock heavily on the news, driving it to gains bouncing around near 30%, even as the broader market plummets. Traders appear to be buying into JASN’s turnaround, led by a value conscious consolidation of operations, including closure of a substantial operation in Brazil.
With cash on hand despite a modest debt load, the downside appears to be limited on JASN as it returns to profitability.